If you wait until an exit interview to find out why a valuable employee has decided to move on, you've missed a golden opportunity — not just to keep a productive member of your team but to identify and fix issues within your organization before you lose others. Instead, touching base with employees about what motivates them while they're still on staff is part of a key strategy in gaining an edge in today's tight talent market: employee retention.
Why employee retention is important
Employee retention is a critical issue as companies compete for talent in a tight economy. The costs of employee turnover are increasingly high — as much as 2.5 times an employee's salary depending on the role. And there are other "soft costs": lowered productivity, decreased engagement, training costs and cultural impact.
The payoff for organizations that focus on employee retention is well worth the time and investment, according to the Society for Human Resource Management (SHRM). Increased performance, better productivity, higher employee morale and improved quality of work, not to mention a reduction in turnover, are all organizational benefits.
The bottom line is that by focusing on employee retention, organizations will retain talented and motivated employees who truly want to be a part of the company and who are focused on contributing to the organization's overall success, according to SHRM.
Employee retention rates
LinkedIn data from 2017 shows a worldwide turnover rate of 10.9 percent; the tech sector showed the most volatility with 13.2 percent turnover rate, based on LinkedIn member data. Certain areas within the tech sector showed even higher turnover rates, which could indicate an increased demand for these skills, according to LinkedIn.
"The computer games (15.5 percent), Internet (14.9 percent), and computer software industries (13.3 percent) drove tech turnover the most — but those rates pale in comparison to the churn you see within particular occupations," according to Michael Booz, writing for the LinkedIn Talent Blog. "User experience designers had extremely high turnover at 23.3 percent (they're also extremely in-demand), with both data analysts and embedded software engineers at 21.7 percent. In fact, embedded software engineers receive the most InMails per person of any occupation in North America," Booz says.
Employee retention strategies
How can you increase retention rates? You should start at the very beginning of the recruitment process.
1. Recognize retention starts with recruiting
"Retention starts right from the beginning, from the application process to screening applicants to choosing who to interview," says Dan Pickett, CEO of Nfrastructure, an infrastructure, managed services and network services firm. "It starts with identifying what aspects of culture and strategy you want to emphasize, and then seeking those out in your candidates."
Nfrastructure currently employs about 300 people, with a retention rate of greater than 97 percent — almost unheard of in the IT industry; or any industry, for that matter. It's a statistic Pickett's proud of, and one each member of the company works hard to maintain, he says.
"It's an increasing returns model; the longer someone's with your company, the more productive they become over time," he says. "You have to look at this as a long game, and take steps to ensure you're doing it right by making sure each employee is completely engaged with and part of the company's ongoing success."
2. Identify candidates who'll stay the course
How can you choose candidates that are more likely to stay? There are some key indicators right on their resume, says Pickett. First, he says, look for candidates with longevity at their previous jobs.
"You're looking beyond what's written on the resume. Have they worked at a company for many years through ups and downs? That speaks to loyalty, perseverance, engagement," he says. "You should also look for someone who plays team sports, who has committed to volunteer or other activities outside of work — that can help tell you that they are invested in a cause, a team, a sport, yes, but also that they have the mindset to stick with something they really care about."
Job-hoppers are something of a gamble, he says. While they might just be looking for the right place to land, Pickett says a candidate "who's had, say, ten jobs in twelve years is going to be really difficult to retain for any company."
3. Provide ongoing education and clear paths to advancement
Promoting from within not only provides a clear path to greater compensation and responsibility, it also helps employees feel that they're valued and a crucial part of the company's success.
Of course, promotions go hand-in-hand with employee development and education, and this should be another tool in your retention arsenal, says Pickett. Whether by corporate training to help foster the acquisition of new skills, new technologies or new processes or through tuition reimbursement from outside courses, furthering your employees' education can help them feel valued and invested in the company, he says.
According to new research from the Consumer Technology Association (CTA), high-skills training (80 percent) and professional development programs to hone soft skills (74 percent) are perceived among the top benefits for retaining employees' services over the next five years.
"Learning cannot just be an afterthought — it must be a core focus of any strong organization," says Kevin Griffin, an IT advisor at Falco Enterprises and former CIO of GE Capital. "When learning is part of your culture, it doesn't stand out as something outside the norm. For example, a learning-focused organization doesn't just hold periodic learning events or workshops separate from the day-to-day work. Instead, learning is integrated in every project or task, and employees are encouraged to dive in and learn by doing, asking questions when they hit roadblocks. "
A focus on education is also key to higher retention rates, says Griffin. A commitment to training is seen by employees as an investment in their worth and a powerful incentive to stay at the company, he says.
"Investing in your employees' education can help retain talent and intellectual property at a time when there's stiff competition for both," says Griffin. "The need for new skill sets and evolving roles are in demand at rapidly growing rate, so putting someone on a career path that doesn't have any room to develop is not only a career-limiting move for the employee, but a business-limiting move for the company."
4. Offer the right benefits
Benefits and perks play a large role in keeping employees happy, engaged and healthy. But benefits can go far beyond healthcare coverage and paid sick leave. You also should consider offering stock options or other financial awards for employees who exceed performance goals or who stay with you for a predetermined time period, says Pickett. Nearly nine in 10 companies (88 percent) view incentive compensation and bonuses as key to retaining employees in the next five years, according to the CTA.
Flexible work schedules, the opportunity to work remotely and generous paid leave policies also go a long way toward helping employees feel they are valued well beyond what they contribute at the workplace, says Change.org's global head of Human Resources David Hanrahan. Hanrahan's company, an online social change platform, recently announced it will offer up to eighteen weeks of paid parental leave for all employees, and adds that Change.org is encouraging other firms to do the same.
Hanrahan argues that, if employees are not offered leave, or are forced to return to work because they cannot afford unpaid leave, "is the employee fully engaged at work or are they distracted and resentful?" That distraction and resentment can build, and can often drive an otherwise satisfied employee to consider other options.
Here, the CTA's findings resonate, as flexible working arrangements ranked fourth among the top benefits for retaining talent, behind health insurance, bonuses, and paid time off.
5. Be transparent and open
Creating open communication between employees and management can help foster a sense of community and a shared purpose, says Pickett. Regular meetings in which employees can offer ideas and ask questions as well as "open-door policies" that encourage employees to speak frankly with their managers help employees feel they are valued and that their input will be heard, he says.
"I also open up my own personal network of former colleagues, friends, networking contacts to any other employee that wants to network and talk to someone at other companies and in other industries," Pickett says. "I set them up to talk with each other, and then I leave them alone. Without me there, I feel I can convey a sense of trust so employees and fellow leadership can learn and grow from others outside my company."
6. Leverage technology
Another approach is to use an employee polling tool like David Niu's TINYpulse, which sends out a single question to a company's workforce at pre-set intervals and then tallies results anonymously.
"Everyone knows that the business changes more than once a year, and so do people," Niu says. "Our tool lets businesses send one highly targeted question at pre-set intervals — maybe monthly, or even weekly — so that HR can identify issues early on and rectify them." For example, he says, some companies using the tool have asked, "What is one process that, if eliminated, could make you more productive?"
It's then up to company leadership to act on that feedback or explain why that action might not be possible, Niu says.
"You have to be open and transparent and be able to say what you can and can't commit to," he says. "But just the fact that the employees are being heard, that they are being listened to is important and can improve retention, even if there's no way the company can address their challenges at the moment."
7. Put data (and AI) to work
Organizations have incredible amounts of employee data available — why not use it to identify who's most likely to leave, why, and then take steps to prevent that, says Dave Weisbeck, CSO at workforce analytics software firm Visier. While on the surface, an employee's departure may seem obvious or to fit a pattern, but using AI and advanced analytics can help pinpoint underlying factors that contribute to attrition, ones that might not be as obvious as you thought.
"I recently stumbled upon this Glassdoor survey that calls out January as the month when more employees are likely to leave," says Weisbeck. "But contrary to that survey finding, a lot of the data from our own clients shows that's not necessarily true. We looked across all of our data — about a million employees — and what we've found is a very clear pattern on a quarterly basis, and Q3 is the biggest quarter for resignations."
Why is that? From the data, Weisbeck says Visier's team extrapolated that the timing of these resignations isn't necessarily defined by the calendar, but around internal processes and structures like bonus payments.
"People are thinking of this like, 'Okay, I received my bonus and now I can leave,' not 'Oh, it's a New Year, time for a new job,'" Weisbeck says. "Since many organizations time their bonuses to hit around Christmas and the end-of-year holiday season, it makes sense to see the January exodus. The pay and bonuses — or lack thereof — aren't the reason they're leaving; often times they have decided to leave months before but have hung on until they receive this money."
Looking more closely at the data can help uncover patterns like this, potentially contradicting conventional wisdom, he says. AI and machine learning can help identify and address these issues before they lead to attrition and turnover.
"Commute time, for example, isn't as big a factor in people's engagement, happiness and their chances of leaving a job as distance to family," Weisbeck says. "If your commute is an hour and a half each way and you have a family at home, you're not necessarily dissatisfied with the commute; it's the time you're not spending with your family. So, organizations could add more flex time. Remote work opportunities. Anything that could help address that pain point."
A more extreme example he offers is an employee who grew up in North Carolina and whose family still lives there, but who now lives and works in Portland, Oregon.
"In that situation, commute time isn't even in the equation; it's a bigger disconnect. Between travel time for holidays and vacation and trip expenses, the time zone issues — people in those situations are more likely to leave," Weisbeck says. "We've seen client companies address these issues by relaxing their vacation and travel policies; helping employees purchase airline tickets and so forth."
8. Be prepared for turnover
Of course, sometimes turnover is inevitable, says Nfrastructure's Pickett. Organizations must be prepared to lose star talent, especially if they have the opportunity to move into their dream job, he says.